Newsletter

Lawsuit against county over water and sewer to move forward

Judge John R. Turner gave county commissioners a partial victory last week in a lawsuit filed against the county and commissioners in 2010.

The suit was filed in Effingham County Superior Court by a bankruptcy trustee on behalf of Darrell Morgan. Morgan owned a portion of the Grandview tract, located east of Rincon and adjacent to Old Augusta and Fort Howard Roads. It was formally called Mill Creek.

The suit claims the county committed breach of contract in not providing water and sewer services to the property. The suit points to several documents, including a March 1, 2005 letter by then-commission Chairman Hubert Sapp stating that water and sewer was to be available at the site by July 2006. Other documents include a May 10, 2006 water and sewer agreement signed by Morgan and the county.

The suit also asserted claims against former county commissioners, Hubert Sapp, Myra Lewis, Jeff Utley, Verna Phillips, current County Commissioner Reggie Loper and County Administrator David Crawley, of fraud, breach of contract, promissory estoppel and negligence. The suit also asked for attorney’s fees. Turner ruled last week that county commissioners can not be sued individually in the case but allows the suit to continue against the county. The order was in response to a summary motion judgment motion filed by the county.

Turner found that commissioners could not be sued individually for several reasons, including that they are protected by sovereign immunity. Sovereign immunity bars some legal actions against governments. Turner wrote that the defendants were acting in their official capacities in regards to the Grandview issue.

Fraud claims against the commissioners and Crawley also won’t move forward in the case, with Turner stating that commissioners took actions that showed they had an intent to provide the service. Turner also said the Sapp letter was a “mere agreement to reach an agreement” and couldn’t be relied on (by Morgan).

As to the promissory estoppel claim against the county, Turner found, however, that there is evidence in the record that Morgan’s reliance on the Sapp letter was reasonable and that Sapp knew Morgan was relying on that letter to get financing. Promissory estoppel is a legal principle that prevents a person who made a promise from backing out when someone else has reasonably relied on the promise and will suffer a loss if the promise is broken.

Regarding breach of contract Turner wrote that there are triable issues of fact as to whether the county breached a contractual obligation to provide the service, based on the 2006 water and sewer agreement.

Turner’s order states that the county has said the service was not extended to Grandview due to delays in the Old Augusta road project.

The suit is similar to another brought against the county by the Old Augusta Group.

Old Augusta Development Group was incorporated in May 2005 with initial members including former county commission Chairman Gregg Howze, Keith Johnson, Philip Heidt, Carey Heidt and Claude M. “Mickey” Kicklighter Jr. Howze was on the commission for one term, ending in December of 2004.

According to court documents, Old Augusta Group incorporated after Howze sought investors to develop the 560-acre tract. He had contracted to make the purchase on Feb. 8, 2005. The Old Augusta investors kept 471 acres, selling 75 acres to Morgan and Howze retaining 10 acres.

The Old Augusta suit also points to the March 1, 2005 letter from Sapp.

Old Augusta’s claim also states commissioners voted to send the letter of intent for service after being advised by then-County Administrator David Rutherford that the county would be obligated to “actually provide the water and sewer services because the purchasers and their financial institutions would be relying on Defendants’ (the county) representations.”

Old Augusta’s complaint also alleges their bank relied on those county promises before making the purchase loans.

Sea Island Bank, according to the court filings, loaned Old Augusta $6 million for the land, and the group’s shareholders loaned $1.5 million to the corporation and signed personal guarantees to Sea Island Bank. The purchase price of the property was $7.5 million.